Silent PPOs, 3rd Party Negotiating Companies, and Repricing Software

Archive for the ‘News’ Category

Silent PPOs, 3rd Party Negotiating Companies, and Repricing Software, and how you can to stop them in their tracks and recover what you are owed

By Maggie Caudell, Managing Director of ClaimsWorks, Inc.

Increasingly, healthcare insurance carriers are resorting to sneaky measures to save money on their bottom line. Unfortunately, some of the measures being taken are underhanded, to say the least. Allow me to introduce to you the little-known workings of “silent PPOs”. In a nutshell insurance carriers are using creative means to get around having to pay the out-of-network rates they have promised in their policies. They have resorted to commissioning 3rd party companies to avoid paying the full amount that is owed.

3rd party companies establish contracts with many different insurance carriers – some with in-network rates, but not all (that is not all officially). Once a facility/provider is linked to a 3rd party company through any insurance carrier, whether in-network or out-of-network, that facility/provider will be in the 3rd party company’s databanks.

The following is the chain of events as they play out with “silent PPOs”:

A provider is credentialed with an insurance carrier as an in-network provider. That insurance carrier then forms a contract with a well-connected 3rd party company.

The same provider decides to provide care to an out-of-network patient insured by a different insurance carrier that the provider is not credentialed with.

Then the provider files a claim with the out-of-network insurance carrier.

It just so happens that this new out-of-network insurance carrier has a contract with the same 3rd party company, as is used by the same (first mentioned) in-network insurance company that the provider is credentialed with (unbeknownst to the provider).

Then the 3rd party company checks its databanks to see if it has any in-network contracts with any other insurance carriers for this particular provider.

As it turns out the 3rd party company finds that it has this same provider in its databanks with an in-network contract with a different insurance carrier (the first mentioned above insurance carrier). Good luck for the 3rd party company and the (supposed to be) out of network insurance carrier! They can “piggy-back” on other existing contracts.

Lastly, the 3rd party company applies the in-network rates (which could be substantially less) to this out-of-network provider’s claim.

The 3rd party company claims it has an in-network contract with the provider, even though the provider never established a contract “directly” with this 3rd party company. Rather, the 3rd party company has a direct contract with the (above first mentioned insurance carrier).

This is how insurance carriers lay claim to in-network rates even for their out-of-network claims Everybody wins – except the provider that is. Very sneaky.

The following is an illustration. It is a little complex and difficult to follow:

The color-coded fictional players are:

Valley View Hospital – a hospital that is only credentialed as an in-network facility with a few Insurance carriers but accepts other out-of-network PPO insurance as well.

Verifiable Insurance – an insurance carrier who offers PPOs to its members. Verifiable outsources some of its claims processing.

Beguiler Insurance – an insurance carrier who offers PPO policies to its members with out-of-network provisions. Beguiler then contracts with a 3rd party company to outsource its claims processing using a loop hole to avoid paying out-of-network rates.

Wecheatdoctors Inc. – a 3rd party company who contracts with many insurance carriers to process claims for them and to help insurance companies avoid paying out-of-network rates in full.

First scenario:Valley View Hospital holds an in-network contract with Verifiable Insurance carrier. Unbeknownst to Valley View Hospital, Verifiable contracts with a 3rd party company called WecheatdoctorsInc. to process some of its claims.

Second scenario: Valley View Hospital is not credentialed with an insurance carrier called Beguiler Insurance and has no contract with Beguiler what-so-ever. A patient – Joe Doe, who has a policy with Beguiler (with out-of-network provisions) comes into Valley View Hospital. Since Joe Doe’s policy has out of network 80/20 provisions, Valley View admits and treats Joe Doe. Valley View Hospital then proceeds to submit its claim to Beguiler, Joe Doe’s insurance company in accordance with Joe Doe’s out-of-network provisions – per his policy.

Expectation: Valley View Hospital expects to receive a payment of $10,000 (80% of the billed amount from Beguiler). They plan to bill the patient for the remaining 20% of the bill.

Secret contract:Beguiler, in an effort to avoid paying out-of-network rates, brokers a contract with Wecheatdoctors – the same above mentioned a 3rd party claims processing company used by Verifiable Insurance (mentioned in the first scenario).

The second scenario plays out: As a result of Wecheatdoctors’ contract with Verifiable’s in-network rates, Wecheatdoctors actually claims to have an in-network contract with Valley View Hospital too. (Remember Verifiable holds a contract with Wecheatdoctors as a 3rd party claims processing company.) Wecheatdoctorsalready had Valley View Hospital in its databanks as an in-network facility through its contract with Verifiable. Therefore Wecheatdoctors lays claim to in-network rates with Valley View Hospital.

The explanation: Even though Valley View Hospital holds no “direct” contract with any 3rd party company, Wecheatdoctors, takes advantage of the original contract that Wecheatdoctors holds with Verifiable.Wecheatdoctors proceeds to reprice the value of Valley View Hospital’s claim by lowering it to a discounted in-network amount – Verifiable’s in-network rates.

The connection: The in-network rate that was originally contracted between Verifiable and Valley View Hospital is now the determining basis that Wecheatdoctors uses to justify lowering the value of Valley View Hospital’s claim. Wecheatdoctors has just “piggy-backed” on the contract that is held between Verifiable and Wecheatdoctors.

The Surprise:Wecheatdoctors presents its EOB to Valley View Hospital with an “adjusted amount” for payment of only $7,000 – while not explaining that it is laying claim to in-network rates. Very sneaky!

The confusion: The billing department at Valley View Hospital may find it strange that the EOB lists Wecheatdoctors as the payer for Joe Doe’s claim. Never having heard of Wecheatdoctors, they remember that they sent the claim to Beguiler. Valley View Hospital’s bill of $10,000 has been handily lowered to $7,000, even though Valley View Hospital never authorized this adjustment.

This may be legal: Insurance carriers sometimes include vague clauses in their credentialing contracts with facilities/providers that enable them to broker with or outsource to 3rd party companies.

This illustration is a classic example of what is being termed as “silent PPOs” abuse.

Sometimes these kind of discounts can “secretly” be applied to your submitted claims by 3rd party claims processing companies, even though they do not even possess any kind of second hand contract for in-network pricing. They may resort to another approach to pay you less, sometimes dramatically less than in-network rates.

Insurance companies can accomplish the same outcome of acquiring lowered “adjusted amounts” in a few ways, in addition to laying claim to in-network rates. THEY determine how much they will pay you by contracting with negotiator companies or repricing companies, who simply lower the value of your claims by suggesting that the billed amount exceeds “reasonable and customary” rates. Sometimes they will send you a note asking for you to sign to accept payment according to their terms. If you sign, they will claim that the signature constitutes a contract. Unsuspecting staff members can fall prey to this tactic.

The term “repricing software” also may show up unexpectedly on EOBs indicating that liberty was taken to try to pay you less than what you deserve. This “silent PPO” abuse is especially prevalent in the case of workers compensation claims and automobile injury claims. Auto insurance companies and workers compensation companies outsource their claims to be processed by 3rd party companies, because they do not handle medical claims processing themselves. (Some 3rd party companies are entirely legitimate, as in the case of self-insured employers who outsource their claims processing.)

So, if you have been the victim of “silent PPOs” or the like, you should know that you are not helpless to combat them and recover what you are owed. The following is the approach that ClaimsWorks uses to go after 3rd party companies in order to recoup for you what would otherwise be lost revenue.

How we, at ClaimsWorks pursue these 3rd party negotiator or repricing companies sometimes referred to as “silent PPOs” to recover lost revenue —

Using HIPAA compliant policies, we would be calling and corresponding with insurance companies and 3rd party companies, so we would need a list of all of the underpaid claims. The name of the patient, DOB, patient’s address, DOS, corresponding insurance company, insurance member # (preferably a copy of the front and back of the insurance card).

We would need your NPI number and tax ID under which the claim is filed.

Then we would need to take a close look at the EOBs. Obviously, if the claim has been dramatically (seemingly arbitrarily) lowered in value in a substantial way, that would be our first clue that we are dealing with a 3rd party company. We would look for certain language. Terms like: “affiliated networks”, “extended networks”, “voluntary PPOs”, “wrap-around PPOs”, or “non-directed PPOs” are indicators. The mention of “repricing software” on the EOB is also an important indicator. We would be looking for unfamiliar company names of PPOs on the EOB that are different from the insurance company listed on the patient’s insurance card.

Sometimes the EOB has an adjusted amount owed, without any clues as to who the 3rd party claim processing company is. We would call the insurance company to get more information, and if it is determined that a 3rd party company is involved. We would then begin the process of demanding full payment. We would request that the payer prove that it is actually entitled to the claimed discount that they are purporting, as in showing us a contract that is held between the facility and the 3rd party company.

The consultation of a state-specific healthcare lawyer may be necessary. A lawyer can help us with established state laws and provide us with the appropriate legalese that will need to be included in our communication and letters that we would be sending to insurance payers and 3rd party companies.

Where this is no evidence of any contract between your facility and the 3rd party company, we would insist that because they have no legal contract with you, they owe you back-payment on all underpaid claims. We would argue that they had no rightful basis for lowering the charges. We would insist that they must pay on all the claims in accordance with the patient’s out-of-network provisions. For example, for an 80/20 policy they should pay 80% of the billed amount as specified in a policy for out-of-network facilities/providers.

If the insurance company insists that they consider their discounted payments to be “reasonable and customary”, then we would ask for a detailed explanation of the basis or evidence that they have used to determine that your charges were somehow excessive. We would ask for documentation of how your charges have been considered excessive by comparison to other facilities. They would need to include as part of that documentation the following: names and addresses of the other facilities on which they have based their charges. (Geographic location can make a big difference here.) They would need to include the age of the data that they are using.

If they did manage to acquire a signature constituting a contract from an unsuspecting staff member at your facility/practice, we would begin the process of terminating those policy-specific contracts. The process can take 30 – 90 days. After which time, the repricing must end. These contracts with PPOs last for only for one year, but some have an “evergreen” clause that makes provision for an automatic renewal – “if they do not hear otherwise from you”. In the event that the 3rd party company produces a legitimate contract of some sort, we would be unable to collect on back pay, but we could stop future abuse.

As a part of the process we would be sending certified letters, and we would be copying in the state insurance commissioner in the process. The state insurance commissioner would certainly be kept appraised of the on-going situation in trying to recover these payments that you are owed.

If you are an out of network facility/practice, you should not have any in-network PPO contracts out there that these 3rd party companies can “piggy-back” onto and lay claim to discounted in-network pricing.

In the end and if necessary, you may need to sue to recover funds using a state-specific healthcare attorney to represent you.

In conclusion, there are effective measures that you can take to put an end to “silent PPO” abuse. So, armed with new understanding and strategy, fight, fight, fight to recover that revenue that belongs to you instead of the greedy hands of insurance companies, who contract with 3rd party companies. Don’t let them keep any of the revenue that you earned and deserve!

The work you’re doing now…and how you’re reporting it, is already impacting how much The Center for Medicare and Medicaid Services (CMS) will pay you in 2017. CMS will be implementing another phase of its “Value-Based Payment Modifier” program in 2017. Affecting eligible provider’s payment reimbursements, the program will impact the CMS Part B Medicare claims in 2017 (excluding Medicare Advantage).

In a nutshell − in 2017 CMS will begin adjusting or “modifying” your reimbursements with incentives or penalties for all solo practitioners and groups consisting of 2 or more eligible providers. Going back two years, CMS will use your 2015 PQRS “cost and quality scores” otherwise known as a (QRUR report), to determine whether you will receive either an increase or decrease in your reimbursements (up to +/- 2% for low cost, and up to +/- 2% for quality).

If you managed to score well with CMS through your PQRS reporting, you could receive up to a 4% incentive or reimbursement increase. If you did not participate in the PQRS reporting in 2015, come 2017 you will likely receive up to a 4% penalty or reduction in your claims reimbursements. CMS is truly encouraging doctors and providers to go electronic, utilize strong EHR systems, and participate in its quality measures program (PQRS)!

Another way to avoid the Value-Based Payment Modifier adjustments: If 50% of the providers in your group chose to participate in PQRS reporting – while the other 50% of the remaining providers did not participate, your group could qualify for the 50% Threshold Option which provides for a flat rate reimbursement. In other words, if your group meets the 50% PQRS reporting threshold – because half of your providers participated during the PQRS reporting periods of 2014 and 2015, it may not be subjected to any incentive increases or penalty decreases in reimbursements on claims submitted in 2017.

An important detail for qualifying for the 50% threshold is: If your group consists of 10 or more providers, your group must have avoided the coming 2016 PQRS payment adjustments to qualify in 2017 for the 50% threshold. Groups of 10 or more providers will need to have a good QRUR report card for the reporting period of 2014 to avoid payment adjustments in 2016.

The Value-Based Modifier program is yet one more reason to make sure that you have a solid EHR, complete with PQRS tracking capabilities. While providers can participate in PQRS reporting without using an EHR, using an EHR that is certified for Meaningful Use and has PQRS tracking capabilities is the easiest way to take advantage of CMS incentives and to avoid penalties.

How the ICD-10 transition is impacting your healthcare world likely depends on two things – what type of organization you’re part of, or own, and the steps taken by you and your team, as well as your payers, billers, and EHR vendor to prepare for the changeover.

Early reports indicate that many private practices and small groups, who are quite dependent on the preparations of EHR vendors, billers, and payers, have done everything possible to prepare by training everyone involved in documenting, coding, and billing (if they’re doing billing in-house). Many providers have also created financial buffers to mitigate any slowing of payments and diminished cash-flow.

We’ll be getting more feedback this week at the IPMA Conference – and will be sure to post updates next week about what we hear from DPMs and their teams.

While CMS has established a one-year grace period that ensures claims will be processed for payment as long as the codes are in the correct category (originally “family”), the commercial payers may not be as “gracious”. Early reports do indicate that some major payers are indeed having problems with some ICD-10 related claims. How widespread this will become, and what impact it will have on your practice’s cash-flow remains to be seen.

Here’s a few action steps to consider that can help move your practice quickly through any transition bumps while minimizing negative impact on your operations:

Prepare for reduced cash-flow and slower reimbursements – most likely you’ve got that in place.

Make sure you have increased focus and review of your claims denials – spotting any troubling trends that will help you resolve the most critical issues now so they don’t grow into significant problems. At a minimum, keep a sharp eye on:
a) Denial rates (by payer)
b) Reimbursements vs. contract rates
c) Days in Accounts Receivable (by payer)
d) Amounts denied (by payer)

Be prepared for to quickly respond to an increase in requests for additional documentation.

While there are several key ICD-10 issues that physician practices can manage effectively, there are a few external dependencies, such as billing service providers and EHR systems, which may require quick action. If you see early indications that your EHR software or billing services provider aren’t managing the change effectively, then you’ll need to decide if it’s time to make a change or stick with them as they get their ICD-10 house in order.

Our EHR system has been ICD-10 Ready since 2013, so contact us if you’d like to learn more or arrange a demonstration. We can also provide a Free Practice Analysis to help you identify opportunities to improve your practice’s profitability and streamline workflows.

Industry experts believe there will not be another ICD-10 delay this year, but most in the HIT community are taking a wait and see approach while encouraging practices to continue preparing for a transition this year.

According to a survey by the Workgroup for Electronic Data Interchange (WEDI) published on April 6, 2015, last year’s delay has “negatively affected stakeholders’ progress” preparing for the new code sets. Why the slowdown in preparations? According to the survey, more than 50% of providers cited “uncertainty over future delays” as the most significant barrier to their implementation progress.

Providers may be negatively impacted by multiple factors that seem beyond their control, as they are dependent on EHR, Clearinghouse, and Practice Management software providers. Interesting, and somewhat alarming, is that 25% of vendors said their updated products would not be available until the second or third quarter of 2015. Why won’t some vendors be ready? They cited customer readiness and competing priorities as barriers to preparing for ICD-10.

One can only wonder what priorities are trumping ICD-10 readiness for vendors? Providers should already know when their software vendors will make ICD-10 ready versions available, and at what cost. (At ClaimsWorks, our systems have been ICD-10 ready since December 2013, and are made available to providers with no upgrade fees or costs)

Among health care providers, the survey found:

About two-thirds said they slowed or stopped entirely their transition efforts as a result of the delay

About 33% said they had completed impact assessments of the ICD-10 transition, down from more than 50% of providers who said they had done so in August 2014

About 25% said they had started external testing, down from 33% in August 2014

About 25% said they had tested with Medicare

20% said they did not plan to conduct testing with Medicare

While most industry professionals are moving forward with preparations for a transition this fall, the survey indicates there is good reason to be concerned about the upcoming transition. The organization (WEDI) submitted its concerns in a letterto secretary of the Department of Health and Human Services. “Unless all industry segments take the initiative to make a dedicated effort and move forward with their implementation work, there will be significant disruption on Oct. 1, 2015,” said Devin Jopp, EdD, president and CEO of WEDI.

One of the many benefits of our web-based MediTouch EHR is that updates such as ICD-10 can be implemented instantly and without any cost to the practice. Plus, Meditouch provides an in-system tool that suggests appropriate ICD-10 codes based on the ICD-9 codes you have selected, making the transition that much easier.

This year’s conference theme, “Adapt, Evolve, Change” resonates with physicians, assistants, and practice managers alike as they navigate rough EHR implementations, Meaningful Use Attestation and the upcoming ICD-10 Transition. ClaimsWorks will be attending to provide information to help DPMs with effective solutions for EHR, ICD-10 Transition, HIPAA Compliance, and more. Here’s a few of the key items we’ll be focusing on in booth #711:

EHR

Our EHR system provider, Meditouch (by HealthFusion) will be showcasing their Cloud-based EHR software, so if you find yourself among the 67% of doctors who, according to a 2014 survey by Medical Economics, are “dissatisfied with [EHR ] functionality”, it might be worthwhile to see why Meditouch earns such extraordinarily high marks for:

Ease of Use – 43% of surveyed users gave Meditouch 5 stars out of 5 possible, while 81% gave 4 or more stars out of 5 possible.

Functionality – 39% of respondents gave MediTouch 5 stars out of 5 possible, while 76% gave 4 or more stars out of 5 possible.

Customer Experience – JD Power and Associates recognized HealthFusion for providing “an Outstanding Customer Service Experience” for the second consecutive year.

Meditouch also has a strong focus on podiatry, with a unique ability to customize and adapt to specific practice workflows, making it a great choice for today’s podiatric practice, and it’s the only EHR software that is an APMA Corporate Partner.

ICD-10 Transition

Even with the one-year delay from last October to October 1, 2015, many practitioners, practice managers and medical billers are concerned about the transition, and with good reason: The change is significant, with an increase from 13,000 ICD-9 codes to 68,000 ICD-10-CM codes.

The good news is that our systems are ICD-10 ready, and have been since 2013. We’ve also design our system to make the conversion as smooth as possible for you, with all ICD 10 codes pre-programmed into our database.

HIPAA Compliance

Though the chances of an audit are slim, keeping patient information secure is growing more complicated. Since 2009, there have been more than 800 patient data breeches and 29 million patient records affected by HIPAA violations, according to the 2013 Redspin Breach Report.

While many people think that HIPAA violations are a large-organization problem, consider that all too often a breach results from employee carelessness or even theft. No doubt, smaller practices are at risk. One issue practitioners face: It becomes harder to keep track of electronic communication within the practice when patients and staff often have mobile devices and can be unaware of how easily HIPAA rules can be violated.

Adapt, Evolve, Change – no doubt there will be a lot of discussion and interest on these critical issues at the Conference, and we’ll be sure to find time to enjoy Chicago’s world-class dining as well. Deep-dish pizza anyone?